Operation of vehicles such as automobiles, trucks, boats, airplanes, and the like is subject to a variety of risks. For example, for automobiles, usage of a vehicle often entails risks such as accidents, wear and tear due to poor road conditions, and threats to person and property due to crimes such as car theft, car-jacking, vandalism and assault. While not as prevalent as the above risks, usage of some vehicles may also entail risk to person or property due to terrorist activities or combat activities, e.g., in geographic regions experiencing military or political conflict.
The owners and operators of vehicles assume much of the risk associated with the usage of their vehicles. As such, an owner or operator may minimize risks through careful operation and good judgment, e.g., by avoiding driving through high crime areas at night in the interest of personal safety. However, in addition to the personal risks to an owner or operator, the usage of a vehicle by an owner or operator may also affect other parties having an economic interest in the vehicle or operation thereof. Often, such secondary parties have little or no control on how an operator uses the vehicle, and as such, such parties can be significantly impacted by an operator's use of a vehicle.
For example, insurance companies that insure vehicles or operators charge policy holders premiums that are typically determined using complex actuarial formulas. The actuarial formulas often attempt to approximate the level of risk posed by different policy holders, so that premiums can be assessed based upon the perceived levels of risk, and so sufficient revenue can be generated to pay all claims of policy holders while ensuring a reasonable profit for the companies. Policy holders that have filed previous claims, have caused accidents, or have been cited for speeding violations or more serious crimes such as drunk driving are often charged higher premiums based upon a perceived increase risk level.
In addition, location-based factors such as a policy holder's distance to work and the vehicle theft rates in a policy holder's community may also be factored into the premiums charged to such policy holders. It is assumed, for example, that a person living in an urban area having a high rate of vehicle theft is more likely to have their vehicle stolen than another policy holder in a rural area where the incidence of vehicle theft is much lower.
While such historical data is helpful in setting reasonable premiums, such data doesn't always accurately predict the activities of individual policy holders, and thus the risks posed by each of those policy holders. Insurance companies typically have little control over or feedback from how and where a policy holder operates a vehicle. While a policy holder may live in a relatively safe area, the policy holder may travel into riskier areas without the knowledge of the insurance company. A policy holder may also travel frequently in high accident areas, and thus pose a greater risk of encountering an accident, yet an insurance company often has no way of identifying or accounting for the additional risk posed by that policy holder.
Car rental companies also have a similar problem with controlling the usage of rented vehicles. Rental rates are typically set based upon factors such as the expected depreciation of vehicles and expected wear and tear, as well as estimated rates of vandalism, accidents, theft, and other factors that can affect costs and the number of times that a vehicle can be rented. Likewise with insurance companies, however, the actual usage of a vehicle is typically not a significant factor in the determination of appropriate rental rates. Although some vehicle rentals are charged out based upon mileage; however, where or how the operator drives the vehicle is still not accounted for in the ultimate rate paid by the operator.
Common to both insurance companies and rental companies, as well as other entities that enter into economic transactions associated with vehicle usage, is the fact that values or costs associated with such transactions are typically assessed principally on the basis of historical data. Actual usage by the operators of the vehicles that enter into such economic transactions are typically not relied upon. By failing to take into account actual usage of a vehicle subject to an economic transaction, however, economic inefficiencies are introduced, which can result in non-optimal costs allocated for different situations. From an economic standpoint, operators of vehicles that present lower actual risks are required to bear some of the costs that would be more appropriately borne by other, riskier operators. As such, a significant need exists in the art for a better manner of calculating costs associated with vehicle usage economic transactions to more appropriately allocate such costs among different vehicle operators.